Business, 18.10.2021 21:40 sassyluvinherself

The Hammer Division of Excel Company produces hardened sledge hammers. One-third of Hammer's output is sold to the Government Products Division of Excel; the remainder is sold to outside customers. Hammer's estimated operating profit for the year is: Government Products Outside
Division Customers
Sales $ 51,000 $ 112,000
Variable costs (11,200) (22,400)
Fixed costs (9,000) (18,000)
Operating
profits $ 30,800 $ 71,600
Unit sales 11,200 22,400
The Government Products Division has an opportunity to purchase 11,200 hammers of the same quality from an outside supplier on a continuing basis. The Hammer Division cannot sell any additional products to outside customers. Should the Excel Company allow its Government Products Division to purchase the hammers from the outside supplier at $1.25 per unit?

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The Hammer Division of Excel Company produces hardened sledge hammers. One-third of Hammer's output...

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